Seyfarth Synopsis: Adding to the holiday joy of employee benefits practitioners nationwide, yesterday the IRS issued guidance on several outstanding questions related to SECURE 2.0. At this time of year, we are especially thankful that the guidance was issued on a day other than the day before or following a national holiday.
The so-called "grab bag" of guidance, IRS Notice 2024-2, provides answers to several outstanding SECURE 2.0 questions, including but not limited to:
- Required automatic enrollment in newly established 401(k) and 403(b) plans;
- Providing small financial incentives for contributing to a 401(k) or 403(b) plan;
- Withdrawals for terminally ill employees that qualify for the 10% early withdrawal tax waiver;
- Optional treatment of employer contributions as Roth contributions;
- The safe harbor correction method for errors relating to employee contributions to plans;
- Mid-year replacement of SIMPLE plans with safe harbor 401(k) plans;
- Clarification of the accrual rules for cash balance pension plans; and
- The deadline for amending plans to reflect the CARES and SECURE Acts and SECURE 2.0.
Although the Notice does not provide comprehensive guidance on SECURE 2.0 (notably, it does not include guidance on the mandatory Roth catch-up contribution provision), it does address several important questions that plan sponsors and administrators have been wrestling with over the past year.
We will be providing more substantive information on Notice 2024-2 over the coming days, but in the meantime, Happy Holidays!
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